Scoggins (ST): University of Minnesota regent Michael Hsu takes the NCAA to task

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Scoggins (ST): University of Minnesota regent Michael Hsu takes the NCAA to task

Michael Hsu is a University of Minnesota regent. He is also a basketball fan. He had the same reaction as many others when Duke phenom Zion Williamson suffered a knee injury after his Nike shoe disintegrated in a recent game.

Oh, shoot.

First shock, then thoughts about money and whether Williamson should have been allowed to enter the NBA without a year of college or, at least allowed to receive financial compensation during his brief stop at Duke.

Hsu is not a fan of the NCAA’s amateurism model. He believes it is based on principles that are outdated, unfair and don’t jibe with economic realities of modern college athletics.

“Amateurism is an invention by the NCAA in the 1950s so they didn’t have to pay workers’ comp and didn’t have to pay for the labor,” he said.

The NCAA generated more than $1 billion in revenue last year. The Big Ten distributed $51 million to each of its schools thanks to TV revenue. Coaching salaries have skyrocketed. Hsu sees everybody getting rich in the arms race, except athletes.

He says stakeholders in college sports resist compensating athletes beyond scholarships and cost-of-living stipends because they want “to capitalize on the free labor.”

“That’s where I have a problem,” he said. “The NCAA wants to get their labor for free. But there’s a point where there’s a moral problem with that.”

Hsu said he has been thinking about this topic for 30 years but decided to share his opinions publicly in response to the pay-for-play scandal that rocked college basketball.

He wrote an article for the website Deadspin in November. He outlined his own proposal to compensate athletes while “deflating some old and phony NCAA pieties.”

Hsu compared full cost-of-attendance figures for full-ride scholarship athletes at every Big Ten school from the 2017-18 school year. Northwestern had the highest value at $70,385. The scholarship at Minnesota for an in-state athlete was $25,269, a difference of $45,116.

Hsu thinks schools should provide athletes that difference as compensation to equalize full cost of attendance. He used Northwestern quarterback Clayton Thorson as an example.

“Clayton Thorson was the highest-paid quarterback in the NCAA in 2017 because his full cost of attendance that he was able get was more than [every other school],” Hsu said. “The Clayton Thorson that would have gone to the University of Illinois would have only got $29,000 a year. How is that fair?”

Hsu says each school could decide how to handle that gap, whether it gives cash, tuition credits, a trust fund, pay for graduate school, etc.

Hsu also believes that student-athletes essentially are employees based on their time commitment.

“You have to follow more rules than most employees of any company,” he said. “You have to practice or you don’t play. When you’re in-season, you’re easily spending more than 40 hours a week. That’s a full-time person. So why aren’t you an employee? Only because the NCAA says you’re not.”

Does Hsu realize that the NCAA is just its member schools? That is, the University of Minnesota is the NCAA. The NCAA wouldn't be paying the players, the University of Minnesota would be. There isn't some magical pot of money that belongs to some mystical "other," it would come out of the pot of money that he's responsible for as a U of M regent. And it's simply not feasible or sustainable. Then again, Hsu isn't an economics expert (and isn't particularly bright, to boot) so it's not surprising that he wouldn't understand this.

It's also hilarious that he's a so-called "expert" in "cost reduction," and yet is advocating for an enormous cost increase that is, again, unfeasible and unsustainable.

So, by his idea, all the players would want to go to the cheapest cost school then to get the most cash in pocket. This is one of the most asinine things I’ve heard someone stay and say they’ve thought about it for 30 years to come to this conclusion

Does Hsu realize that the NCAA is just its member schools? That is, the University of Minnesota is the NCAA. The NCAA wouldn't be paying the players, the University of Minnesota would be. There isn't some magical pot of money that belongs to some mystical "other," it would come out of the pot of money that he's responsible for as a U of M regent. And it's simply not feasible or sustainable. Then again, Hsu isn't an economics expert (and isn't particularly bright, to boot) so it's not surprising that he wouldn't understand this.

It's also hilarious that he's a so-called "expert" in "cost reduction," and yet is advocating for an enormous cost increase that is, again, unfeasible and unsustainable.

The 'magical pot of money' is the revenue generated by the athletes.

The NCAA generated more than $1 billion in revenue last year. The Big Ten distributed $51 million to each of its schools thanks to TV revenue. Coaching salaries have skyrocketed. Hsu sees everybody getting rich in the arms race, except athletes.

He says stakeholders in college sports resist compensating athletes beyond scholarships and cost-of-living stipends because they want “to capitalize on the free labor.”

“That’s where I have a problem,” he said. “The NCAA wants to get their labor for free. But there’s a point where there’s a moral problem with that.”

The NCAA generated more than $1 billion in revenue last year. The Big Ten distributed $51 million to each of its schools thanks to TV revenue. Coaching salaries have skyrocketed. Hsu sees everybody getting rich in the arms race, except athletes.

He says stakeholders in college sports resist compensating athletes beyond scholarships and cost-of-living stipends because they want “to capitalize on the free labor.”

“That’s where I have a problem,” he said. “The NCAA wants to get their labor for free. But there’s a point where there’s a moral problem with that.”

Wrong. It's being generated by the schools. No one cares about these athletes in a vacuum - they care about them so long as they play for the school that someone is a fan of. The schools bear all of the financial risk and consequently deserve all of the financial reward. The athletes are mostly fungible commodities that are replaced by another set of athletes the next year, and again the year after that. The school is always there and is actually what people care about.

Wrong. It's being generated by the schools. No one cares about these athletes in a vacuum - they care about them so long as they play for the school that someone is a fan of. The schools bear all of the financial risk and consequently deserve all of the financial reward. The athletes are mostly fungible commodities that are replaced by another set of athletes the next year, and again the year after that. The school is always there and is actually what people care about.

It's being generated by the teams. No one cares about these NFL players in a vacuum - they care about them so long as they play for the team that someone is a fan of. The teams bear all of the financial risk and consequently deserve all of the financial reward. The NFL players are mostly fungible commodities that are replaced by another set of players the next year, and again the year after that. The team is always there and is actually what people care about.

The NCAA generated more than $1 billion in revenue last year. The Big Ten distributed $51 million to each of its schools thanks to TV revenue. Coaching salaries have skyrocketed. Hsu sees everybody getting rich in the arms race, except athletes.

He says stakeholders in college sports resist compensating athletes beyond scholarships and cost-of-living stipends because they want “to capitalize on the free labor.”

“That’s where I have a problem,” he said. “The NCAA wants to get their labor for free. But there’s a point where there’s a moral problem with that.”

This is a funny argument to me.
The athletes all played AAU the year before coming to the NCAA yet the NCAA makes a billion and the AAU circuits make mere millions.

If it was really the athletes not the institutions driving revenue, wouldn’t the numbers when considering the same players are playing be more similar?

I assume the AAF will make more money than NCAA per team football because the athletes make the money and the aaf has better average players than the ncaa

This is a funny argument to me.
The athletes all played AAU the year before coming to the NCAA yet the NCAA makes a billion and the AAU circuits make mere millions.

If it was really the athletes not the institutions driving revenue, wouldn’t the numbers when considering the same players are playing be more similar?

I assume the AAF will make more money than NCAA per team football because the athletes make the money and the aaf has better average players than the ncaa

It might make sense in your head to say that since the schools bring the value they should keep all (most) of the revenue.

But it doesn’t have a legal leg to stand on. It’s a violation of antitrust laws.

Imagine if a company said “our product and our brand bring all the value, so therefore we don’t have to pay our workers that assemble our products.” Wouldn’t fly.

But then you’d say “they do pay them very little though, because that’s the small value they contribute to the overall operation.” Which is correct ... and exactly the point . Allow exactly the same marketplace for companies (teams) to pay their workers (players) what they think their value is. Let the market decide!

It might make sense in your head to say that since the schools bring the value they should keep all (most) of the revenue.

But it doesn’t have a legal leg to stand on. It’s a violation of antitrust laws.

Imagine if a company said “our product and our brand bring all the value, so therefore we don’t have to pay our workers that assemble our products.” Wouldn’t fly.

But then you’d say “they do pay them very little though, because that’s the small value they contribute to the overall operation.” Which is correct ... and exactly the point . Allow exactly the same marketplace for companies (teams) to pay their workers (players) what they think their value is. Let the market decide!

Interesting point of view. Employees are worth "very little".

A company that had that business model would run some interesting ads when they're looking to hire new employees:

"Come join our team! Be part of a fast-paced, energetic workplace! You'll work for a leader in the industry, and our team members' skills and professionalism are second to none! Our company compensation package is competitive, and it's based on what we decide you're worth! And, to be frank we don't think you're worth much! After all, let's be real here... you'll be contributing very little! Do you have what it takes to be a part of growing our business???? Apply online TODAY!"

It might make sense in your head to say that since the schools bring the value they should keep all (most) of the revenue.

But it doesn’t have a legal leg to stand on. It’s a violation of antitrust laws.

Imagine if a company said “our product and our brand bring all the value, so therefore we don’t have to pay our workers that assemble our products.” Wouldn’t fly.

But then you’d say “they do pay them very little though, because that’s the small value they contribute to the overall operation.” Which is correct ... and exactly the point . Allow exactly the same marketplace for companies (teams) to pay their workers (players) what they think their value is. Let the market decide!

It doesn’t have a legal leg to stand on?
Funny you say that considering it has been apparently not legally happening for 50+ ears

It doesn’t have a legal leg to stand on?
Funny you say that considering it has been apparently not legally happening for 50+ ears

Just because no one has challenged it before, doesn't mean it was legal.

It is being challenged now. Google "Alston v NCAA". And the higher ups in higher ed know that the NCAA is going to be a big time loser in the case. There are probably closed door meetings right now among a group of presidents, trying to figure out how they're going to maintain at least some semblance of the status quo, while having to pay players.

Just because no one has challenged it before, doesn't mean it was legal.

It is being challenged now. Google "Alston v NCAA". And the higher ups in higher ed know that the NCAA is going to be a big time loser in the case. There are probably closed door meetings right now among a group of presidents, trying to figure out how they're going to maintain at least some semblance of the status quo, while having to pay players.

The O Bannon case was initially a success for the plaintiff because of the judge’s peculiar ruling...and was largely overturned on appeal. The case you’re referring to IIRC has the same judge (these cases all seem to get steered a certain way) and she will likely use some of the same curious logic in her decision. Any appeal will take several years and considering the stakes if necessary I can envision this being reviewed all the way to the SC. There are obvious numerous angles with this issue...and implications. If successful the Gophers could have as short a time frame as 3-4 years to win a Big Ten Title before the roof caves in.

The O Bannon case was initially a success for the plaintiff because of the judge’s peculiar ruling...and was largely overturned on appeal. The case you’re referring to IIRC has the same judge (these cases all seem to get steered a certain way) and she will likely use some of the same curious logic in her decision. Any appeal will take several years and considering the stakes if necessary I can envision this being reviewed all the way to the SC. There are obvious numerous angles with this issue...and implications. If successful the Gophers could have as short a time frame as 3-4 years to win a Big Ten Title before the roof caves in.

Yes, whomever loses Alston v NCAA will appeal. And that process will take years (it has already taken years). I don’t agree that the SC would definitely choose to hear this one, but they might.

No roofs are caving in, unless you consider the possibility that the Gophs might never again get to compete against the likes of USC, Texas, Alabama, and Clemson for a national title to be a “caving in”. I’d be just fine being in the next half-step down tier. We defacto are now, anyway.

Can very easily see those elites having $30M football budgets: 10M for player compensation, 10M for coaching salaries, 10M for the remaining yearly operations. Those teams might be completely separate, private organizations having a “in name only” association with the school, and renting out the school’s facilities.